Pardee Hospital increases revenue, cash on hand

By Caitlin ByrdTimes-News Staff Writer

Published: Friday, December 20, 2013 at 7:16 p.m.

Last Modified: Friday, December 20, 2013 at 7:16 p.m.

From his leather chair in the hospital's third-floor board room, the end-of-year audit presentation began to look less like a series of line items and more like an affirmation to Pardee Hospital CEO Jay Kirby.

Facts

Where did Pardee get its $150 million in operating revenue?

He nodded his head in agreement as Steve Stang, an accounting representative with the Charlotte-based firm of CliftonLarsonAllen, addressed members of the hospital board of directors Wednesday.

“You're better and stronger than you were,” Stang said as he clicked through a PowerPoint slideshow. “You're in a good position from a community standpoint.”

From September 2012 to October 2013, the hospital reported operating revenue of roughly $150 million — an increase of 4.35 percent from last year, said Pardee Chief Financial Officer Alan House.

Throughout the year, executive leadership presents monthly financial statements to the hospital board. The annual audit presented last week, however, was conducted by an independent third party to validate the board's financial findings.

After the meeting, Kirby said receiving the bill of good financial health from an outside agency meant a little more this year to the hospital's board, since the accomplishments came “in spite of the storms that were put up against us.”

First, the North Carolina General Assembly voted not to expand Medicaid under the Affordable Care Act, also known as “Obamacare.” Kirby estimated the hospital lost $4 million to $6 million this year as a result.

Then came the sequester, when automatic budget cuts hit the hospital March 1. That, Kirby said, resulted in another loss — this time for $1.2 million.

Yet, Stang said, the hospital overcame those external pressures, ended its fiscal year in the black and did it differently than most community hospitals of similar size.

“Many community hospitals are struggling with how to get their revenues in through the doors,” Stang said, explaining that the local hospital's revenue came largely from an increase in patient volume rather than investment earnings.

A breakdown of the $150 million in operating revenue shows the patient population the hospital serves. Kirby said 60 percent of that revenue came from Medicare dollars, 10 percent came from Medicaid, 23 to 24 percent came from commercial patients, and self-paying patients contributed the rest.

The hospital also saw an increase in expenses. Financial statements show that the hospital used $146 million to cover items such as technology, bandages, supplies, drugs, power and heating bills and about $75 million of that was allocated for the hospital's 1,200 employees.

“The margin (of revenue over expenses), even though it's positive, is always razor-thin at a hospital,” House said.

Board of Directors Chairman Bill Moyer also applauded the hospital for its ability to maintain its amount of cash on hand. Treasurer Bill Smith estimates it costs about $375,000 per day for the hospital to conduct its operations. According to the audit, the hospital can keep its doors open 136 days — 24 hours more than it could last year.

“Some of us can remember the days when our cash on hand was 60 days and were wondering if we were ever going to get there. This is a nice improvement,” Moyer said.

With those figures in mind, Kirby said that even though the hospital “weathered the storm,” the forecast for the coming fiscal year doesn't look much brighter and the first quarter is already proving stormy for the hospital.

According to a Dec. 19 report from Citi Financial Research's survey of nearly 100 hospitals nationwide, hospital inpatient admission in November dropped to its weakest level in more than a decade. The report attributes the drop to changes in reimbursement rules for Medicare patients and confusion surrounding the rollout of the federal health care law.

Pardee Hospital has not been immune to the trend. In November, emergency room visits dropped to 4,814, which was 391 below expectations. Urgent care visits and overall patient admissions visits were also down.

House said this illustrates the ripple effect that can occur when emergency department visits decline.

“One of the key indicators for us is our emergency room visits because, of all our admissions that happen, 80 percent of those admissions come to us through the emergency department,” he said, explaining that when those numbers, drop it hurts overall because “that's one of your main sources of how you get patients in because they need in-patient care.”

The other conundrum, he said, comes from the fact that unlike advertistments for phsycians or urgent care facilities, “You can't encourage emergency room visits because that's just a function of whether people need it or not.”

Hospital officials explain that the recent drop in admission numbers ultimately makes for a delicate balancing act between hiring, staffing and budgeting.

“We're expecting to make $160 million in revenue to cover expenses this year, and if those don't come out and hospital revenues are slow, then we have to adjust our staffing,” Kirby said. He told the board, “We want to be judicious in our hiring, and we want to make sure that physician (jobs) posted are needed.”

Last year, the hospital couldn't open all of its beds because it didn't have an adequate amount of staff, which forced officials to turn patients away.

This year, Kirby said, “You can't just have stagnant staffing. You've got to flex up and flex down. We have to do a better job of flexing. That's always difficult because we know in November, December and January, a flood of patients are coming because of flu, because of cold weather, because of a number of things.”

Board member Dr. Bill Medina described the challenge the board faces with its budget as “a moving target.”

<p>From his leather chair in the hospital's third-floor board room, the end-of-year audit presentation began to look less like a series of line items and more like an affirmation to Pardee Hospital CEO Jay Kirby.</p><p>He nodded his head in agreement as Steve Stang, an accounting representative with the Charlotte-based firm of CliftonLarsonAllen, addressed members of the hospital board of directors Wednesday.</p><p>“You're better and stronger than you were,” Stang said as he clicked through a PowerPoint slideshow. “You're in a good position from a community standpoint.”</p><p>From September 2012 to October 2013, the hospital reported operating revenue of roughly $150 million — an increase of 4.35 percent from last year, said Pardee Chief Financial Officer Alan House. </p><p>Throughout the year, executive leadership presents monthly financial statements to the hospital board. The annual audit presented last week, however, was conducted by an independent third party to validate the board's financial findings. </p><p>After the meeting, Kirby said receiving the bill of good financial health from an outside agency meant a little more this year to the hospital's board, since the accomplishments came “in spite of the storms that were put up against us.”</p><p>First, the North Carolina General Assembly voted not to expand Medicaid under the Affordable Care Act, also known as “Obamacare.” Kirby estimated the hospital lost $4 million to $6 million this year as a result.</p><p>Then came the sequester, when automatic budget cuts hit the hospital March 1. That, Kirby said, resulted in another loss — this time for $1.2 million.</p><p>Yet, Stang said, the hospital overcame those external pressures, ended its fiscal year in the black and did it differently than most community hospitals of similar size. </p><p>“Many community hospitals are struggling with how to get their revenues in through the doors,” Stang said, explaining that the local hospital's revenue came largely from an increase in patient volume rather than investment earnings. </p><p>A breakdown of the $150 million in operating revenue shows the patient population the hospital serves. Kirby said 60 percent of that revenue came from Medicare dollars, 10 percent came from Medicaid, 23 to 24 percent came from commercial patients, and self-paying patients contributed the rest. </p><p>The hospital also saw an increase in expenses. Financial statements show that the hospital used $146 million to cover items such as technology, bandages, supplies, drugs, power and heating bills and about $75 million of that was allocated for the hospital's 1,200 employees.</p><p>“The margin (of revenue over expenses), even though it's positive, is always razor-thin at a hospital,” House said. </p><p>Board of Directors Chairman Bill Moyer also applauded the hospital for its ability to maintain its amount of cash on hand. Treasurer Bill Smith estimates it costs about $375,000 per day for the hospital to conduct its operations. According to the audit, the hospital can keep its doors open 136 days — 24 hours more than it could last year.</p><p>“Some of us can remember the days when our cash on hand was 60 days and were wondering if we were ever going to get there. This is a nice improvement,” Moyer said.</p><p>With those figures in mind, Kirby said that even though the hospital “weathered the storm,” the forecast for the coming fiscal year doesn't look much brighter and the first quarter is already proving stormy for the hospital.</p><p>According to a Dec. 19 report from Citi Financial Research's survey of nearly 100 hospitals nationwide, hospital inpatient admission in November dropped to its weakest level in more than a decade. The report attributes the drop to changes in reimbursement rules for Medicare patients and confusion surrounding the rollout of the federal health care law.</p><p>Pardee Hospital has not been immune to the trend. In November, emergency room visits dropped to 4,814, which was 391 below expectations. Urgent care visits and overall patient admissions visits were also down.</p><p>House said this illustrates the ripple effect that can occur when emergency department visits decline.</p><p>“One of the key indicators for us is our emergency room visits because, of all our admissions that happen, 80 percent of those admissions come to us through the emergency department,” he said, explaining that when those numbers, drop it hurts overall because “that's one of your main sources of how you get patients in because they need in-patient care.”</p><p>The other conundrum, he said, comes from the fact that unlike advertistments for phsycians or urgent care facilities, “You can't encourage emergency room visits because that's just a function of whether people need it or not.”</p><p>Hospital officials explain that the recent drop in admission numbers ultimately makes for a delicate balancing act between hiring, staffing and budgeting.</p><p>“We're expecting to make $160 million in revenue to cover expenses this year, and if those don't come out and hospital revenues are slow, then we have to adjust our staffing,” Kirby said. He told the board, “We want to be judicious in our hiring, and we want to make sure that physician (jobs) posted are needed.”</p><p>Last year, the hospital couldn't open all of its beds because it didn't have an adequate amount of staff, which forced officials to turn patients away. </p><p>This year, Kirby said, “You can't just have stagnant staffing. You've got to flex up and flex down. We have to do a better job of flexing. That's always difficult because we know in November, December and January, a flood of patients are coming because of flu, because of cold weather, because of a number of things.”</p><p>Board member Dr. Bill Medina described the challenge the board faces with its budget as “a moving target.”</p><p>“But we're moving in the right direction,” Moyer said. </p><p>Reach Byrd at caitlin.byrd@blueridgenow.com or 828-694-7881.</p>